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How Must We Act to Ensure Success?
How Must We Act to Ensure Success?
Okay, we’ve done the first two questions. First question, why do we do what we do? Getting at that core purpose. Second question, what does success look like? Really defining that vision for success, that if we are successful as a team, here’s what we will create for our customers, stakeholders, employees and otherwise. Now time for the third question. This is potentially one of the most important questions that you have to to answer as a leader in your team, which is, how must we act to ensure success? This question is ultimately getting at the values that will guide the choices and behaviors for yourself, but even more importantly, your team members.
One of your responsibilities as a leader, because you’re not gonna always be there in the room when people are behaving, making decisions, and acting. You need to be able to provide what I call guideposts, the values that are going to guide decisions and guide actions. And ultimately these values have to be embedded in the vision that you are creating and communicating for your team. So let’s again look at a few examples. This time I’m gonna show you some examples that maybe don’t necessarily always have the intended impact that we might aspire, or want. Here’s the first. This is a good example of what you might see, when you walk into an organization, up on the wall.
These words of values, in this case they are respect, integrity, communication, excellence. With the quote that says we treat others as we would like to be treated ourselves, the golden and rule if you will. But what’s interesting in this organization in the 90s the 1990s was a client of mine this organization had to add something to its value statement that was shared internally and ultimately the language they added was as follows we do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance do not belong here in this organization. Now, to be perfectly honest if you have to add that language formally to the value statements that you are communicating internally to your company.
You can only imagine the actual culture and behavior that exists within the teams in that organization. Ultimately that organization was one that we now know as Enron, that no longer exists and the history is well documented. So let’s look at other examples where they have defined the values. How must we act to ensure success so that we are able to achieve that vision that we aspire to? Let’s look at an example, Johnson & Johnson. If you’ve ever been to a Johnson & Johnson office location, and this is true for many of their locations around the world. You will see something whether it be in the foyer.
You’ll see it throughout the organization, at people’s desks, whether it be on a mouse pad, or an image somewhere around the office. A statement that Johnson & Johnson calls our credo. This credo is ultimately a statement of its values. A statement of not only if we’re successful here’s what our world looks like but it clearly communicates a set of values that guide choices and behavior. So here’s the credo that is shared with every Johnson & Johnson employee and is reinforced in many different ways throughout the organization. And I’m not going to go into depth or detail and read all of the different sentences and paragraphs in the credo.
This is the credo in it’s entirety so you can read it on your own. But I wanna make one important point. I want you to look at the first paragraph. The first statement. We believe our first responsibility, now I have bolded and underlined first because I think that’s a really important word in this credo. We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers, and all others who use our products and services. Ultimately, Johnson & Johnson is articulating here, is their first priority, their first responsibility is to the customers, the people who actually use their products. Then skip to the second paragraph. We are responsible to our employees.
Everyone must be considered as an individual. So the second paragraph is articulating that employees come next. Our customer becomes first, second paragraph our employees. Now jump to the third paragraph. We’re responsible to the communities in which we live and work and to the world community. So Johnson & Johnson as a global organization is making a commitment to the communities in which they work and live. So again, customer comes first, employees come second, communities come third. Then look at the fourth paragraph, and again I bolded and underlined one word in the first sentence our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas and so on.
But think of the importance, the statement that’s being made here by Johnson & Johnson. And again, go look at their stock performance over the course of history. It’s one of the most successful organizations in the world in terms of financials, profit, and ultimately shareholder value. But what they’re stating here is that our customer comes first, our employees come second our communities come third. And ultimately our stockholders, our shareholders, are our final responsibility. So what’s the importance of this value hierarchy, or this value prioritization? Well, there will come times when you as leaders, and your teams, and your employees have to make choices. Because you can’t always satisfy the needs of everybody.
You can’t always satisfy the needs of your customers, your employees, your communities, and your stock holders. There will come a time and there will come a day when you have to make really tough choices. And engage in behavior that satisfies one stakeholder, potentially a customer, over the benefit of one of the other stakeholders, whether it be an employee, a stockholder, or otherwise. So Johnson & Johnson has had this credo for decades. Why is that important? It’s going to guide, again, decisions, actions, behavior. They’ve had this credo for decades, and in 1982 they were the prime target of an attack. And this attack put a lot of pressure on Johnson & Johnson.
About what it was going to do and really put this credo to test. So let’s look at that example, so what happened was an individual who has actually never been found, walked into a pharmacy, stole or shop lifted bottles of Tylenol. Laced those bottles opened them up and laced them with a poison called cyanide which is lethal or fatal. And then this person put this bottles of Tylenol back on the pharmacy shelf to be sold. Unsuspecting innocent people came bought those bottles of Tylenol, got a headache got sick, took the medicine and ultimately passed away. Seven people in total had died. You can imagine the crisis that now Jonson & Jonson is faced with.
But if you go back to the credo, the question becomes, what do you do? As a leader within Tylenol, what do you do? So you have to remember, the first priority is to the customer, the people who use the products. So let me pause. If you were a leader within Tylenol, what would you choose to do? Ultimately, what the leadership of Johnson & Johnson did is they pulled every single bottle of Tylenol off the shelf. They recalled every single bottle. Was it free? No, it cost the north of one hundred million U.S. dollars.
But that’s a stockholder concern. Their first priority was to the people who use the product, thus resulting to recall the product or pull the product of the shelf. The financial implication, the stock price dropped over 17% in one week.
Earnings estimates dropped 35% immediately. Wall Street certainly was penalizing the company.
Their market share in the category dropped from 37% to 4% in as little as one week. Again, the financial implications were enormous. And for a company, a public company, that is responsible to its shareholders, this was a pretty risky move some might say. But if you have the credo if you have a very clear understanding of how do we have to act? What are the values that we have to act on in order for our company to be successful? And in the case of Johnson & Johnson and not to say that their credo is right for every organization. But in there case, they had articulated for themselves their values and their priorities that were gonna guide choices.
And these were the choices they were making. Now remember, the second priority in that credo is to the employees of Johnson & Johnson. If you take that big of a financial hit due to this crisis many companies would respond by laying off employees who come from that organization. Johnson & Johnson saw it as their responsibility to keep all of those title and all employees. So they redeployed them to other product lines and so on, until they figured out what actually happened. Ultimately once Tylenol, the business was back up and running, they deployed those employees back to the Tylenol business. They ultimately, relaunched Tylenol.
With what we now know today as that tamper-proof packaging, the seal that is at the top of any pill bottle. So ultimately, this crisis turned into an innovation, that we now all benefit from. Interestingly, they continued with their first priority being the customer, which is providing the customer a coupon for essentially free Tylenol, or free Johnson & Johnson products. And they did all of that within a 10 week period. But again, without this credo what choices would they make? It could go many different directions. In this case, they had very clear guidelines about in this time of crisis how are we gonna act in order to be successful?
And that in many ways is attributed back to that clear statement of values in the credo. Let me share with you one more example and then I’ll have you reflect on your values your teams values and how those serve as a guideline for choices and behavior. Here’s a statement from a company that we all know today. We believe that we’re on the face of the Earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex. But now pay attention to the next words.
We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. That is a value statement. That is a statement about how we must act. We must make tough choices in order to be successful. One tough choice is we’re gonna own and control the technologies behind our products. Another tough choice is we’re only going to engage in markets where we know that we can make a significant contribution. But again, this provides a set of guidelines, guide post for making tough choices. We believe in saying no to thousands of projects so that we can really focus on the few that are truly important.
As my friend Adam Grant once said to me, you have to say no to many things, so you can say yes to the things that really matter in life. And this organization is embracing that value. As part of its company’s vision. Ultimately, this company is one that we’ve talked about already in this course, Apple. And in this case, this is Tim Cook’s articulation of the values that are embedded in this company. So we have our three questions. Why do we do what we do? What does success look like? And how must we act, to ensure success? I’d like to pause now and have you reflect on this third question.
Have you clearly articulated for your team the values that are gonna shape and guide the choices that people make and the behaviors that they engage in. Take a few minutes on your own and write down what you see as the values and have you clearly articulated those.
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